Tagged: Budget

Proposal (P): Increase the rate of surcharge on income exceeding Rs 1 crore to 15% from 12%.Impact (I): This will raise the maximum marginal rate of tax to 35.54% from 34.61% on the ‘super-rich’.

P: Increase limit for tax rebate to Rs 5,000 from Rs 2,000 for resident individuals with a total income of up to Rs 5 lakh a year.I: This will ensure an additional saving of Rs 3,090 for small taxpayers.

P: Raise deduction limit for rent paid by an individual who doesn’t have a house and isn’t entitled to HRA from the employer to Rs 60,000 pa from Rs 24,000 pa.I: This will allow the individual to claim an additional deduction of Rs 36,000 pa, leading to a tax-saving of up to Rs 13,015.

P: Under the current provisions, dividend received by an individual from an Indian company is exempt from tax as dividend distribution tax (DDT) is already paid by the firm. It is proposed to charge the individual an additional tax at 10% on the dividend received in excess of Rs 10 lakh.I: This will ensure that dividend earned by super-rich is also subject to tax in addition to the 15% DDT paid by Indian firms. The maximum effective tax that the dividends bear will be 32.21% (i.e. 20.36%+11.85%).

P: Make gains under the Sovereign Gold Bond Scheme, 2015, exempt from tax. Also, provide indexation benefit on transfer of the gold bonds.I: This will give incentive for investing in gold bonds instead of the physical form.

P: For rupee-denominated bonds, give tax exemption to non-resident investors on gains arising from currency appreciation between the dates of issue and redemption.I: This will attract non-resident investors to rupee-denominated bonds and help Indian companies raise funds abroad.

P: Don’t subject NRIs to higher rate of TDS due to unavailability of PAN if they fulfil certain conditions.I: This will bring significant relief to NRIs.

P: Introduce e-assessment and do away with physical presence during tax hearings.I: This will lead to an increase in paperless assessment and less face-to-face interaction between taxpayer and income-tax officers.

P: Increase the threshold limit for TDS in case of withdrawal of PF balances to Rs 50,000 from Rs 30,000.I: Individuals with accumulated PF balances of up to Rs 50,000 will now not be subject to TDS on withdrawal.

P: Individuals with rental income less than the maximum amount not chargeable to tax should furnish Form 15G/15H for non-withholding of TDS.I: This will bring huge relief to senior citizens and small taxpayers who have nil taxable income or income below the threshold limit but had to file I-T return to claim refunds of TDS deducted on rental income.

P: Include exempt income from long-term capital gains on sale of equity shares or equity-oriented mutual funds to determine whether an individual is liable to file I-T return.I: To determine the requirement for filing a tax return, long-term capital gains on sale of equity shares or equity-oriented mutual funds that are exempt from tax also need to be included. Also, individuals with only exempt income from long-term capital gains on sale of equity shares or equity-oriented mutual funds will now be required to file return if the total exempt income exceeds the maximum amount not chargeable to tax (currently Rs 2.5 lakh).

P: Reduce the time-limit for filing of belated return to any time before the end of the assessment year or completion of assessment, whichever is earlier. However, allow a belated return to be revised within a year from the end of the relevant assessment year or completion of assessment, whichever is earlier.I: This will reduce the time-limit for filing a belated return to one year from two years and encourage timely compliance. Revision of belated return will now be permitted, which was not possible earlier.

P: Amend advance tax payment schedule for individuals as (a) 15% of tax payable by June 15; (b) 45% of tax payable by September 15; (c) 75% of tax payable by December 15; and (d) 100% of tax payable by March 15.I: This will increase the compliance burden.

P: Don’t subject to tax shares received by an individual in consequence of demerger or amalgamation of firms without adequate consideration.I: This will bring uniformity in tax treatment of shares.

P: Exempt withdrawal in respect of contributions made on or after April 1, 2016, from a recognised provident fund and an approved superannuation fund, up to 40% of the accumulated balance.I: This will increase the overall tax liability.

P: Exempt 40% of the total amount payable to individuals on closure/opting out of NPS.I: Will reduce tax liability.

Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.
By: PTI | New Delhi | Updated: Mar 1, 2016, 14:11 | Indian Express

Seeking to dispel fears of the salaried class, the government today said PPF will not be taxed on withdrawal and only the interest that accrues on contributions to employee provident fund made after April 1 will be taxed while principal will continue to be tax exempt.

In an interview to PTI, Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.

The proposal, he said, is to tax the interest accrued on PF contributions made after April 1, 2016. “The principal amount will not be taxed and will continue to remain tax exempt on withdrawal. What we have said is 40 per cent of the interest accrued on contributions made after April 1 will be tax exempt and its remaining 60 per cent will be taxed.”

It is that time of the year, when the salaried class starts praying for incremental tax concessions in the annual budget. Analysts, however, say that the government should focus on increasing the tax net instead of announcing new income tax concessions.

That’s because only 3 per cent of over 1 billion people in the country are estimated to pay income tax. Those who earn Rs. 21,000 and more (per month) have to pay taxes, but many small businesses, professionals (such as doctors and lawyers) and rich farmers do not pay taxes.

Tax evasion is not limited to smaller tax payers, analysts say. The number of people who declare annual income of over Rs. 1 crore is abysmally low at just around 50,000 in the country, they added.

“The number of income tax payers in India is woefully small, and the prosperity the country has achieved post reforms, do not reflect in number of taxpayers… We have to devise systems so that we can be able to bring tax avoiding population within the tax net,” said Yashwant Sinha, former finance minister.

According to Mr Sinha, the government has taken “baby steps” by announcing several measures on cash transactions, which could add 30-40 lakhs more tax payers per year.

The Goods and Services Tax (GST), however, could be a big step in bringing more people in the tax net, he added.

“If you had GST for instance, that will help… You will not have a separate sales tax, separate services tax, and a separate excise duty, etc. and you will have income tax. So, people in this country will be paying only two kinds of taxes… If a person is paying a certain amount of excise or service tax and he is not paying income tax, we can easily net him in income tax by finding this out,” Mr Sinha said.

Financial cleaning is one thing that has to be done proactively. Check out these seven tips to clean up your finances and become a pro at managing money:
By: CreditVidya | New Delhi | July 20, 2015 2:21 pm | The Financial Express

A routine weekly cleanup at home involves clearing the accumulated and scrubbing all surfaces squeaky clean! The mantra that most people swear by is, ‘if it looks messy, clean it up’. Unfortunately, this approach is not extended to financial cleaning by most. An approach to cleaning, in general, is reactive. But financial cleaning is one thing that has to be done proactively. Check out these seven tips to clean up your finances and become a pro at managing money:

#1. Get a financial planner!
Yes. You need an exclusive planner to organize your finances. Financial planning definitely cannot share space with grocery lists and birthday reminders in your day to day planner. Your hard earned money deserves special attention. Use this planner specifically for chalking out the details of your finances. Premium payments, outgoing bills, EMI dates, FD records, and more can be tracked by making notes. Organize well and set up a process to track dates and documents. Free you mind space by jotting it all down in the planner.

#2. Clear your debts!
List down all the debts and then calculate the interest you are currently paying on each one. Also, evaluate how long you may have to continue to do so. This can be an eye opening activity! You shall see that few debts are turning out far too expensive. Figure out if you can clear any of these in the near future and draw up an action plan. Re organizing your debt can be a game changer! Pay off those debts and dodge the money black hole called interest payment.

#3 The magical tool – Budget!
If you don’t have a budget planned yet then stop everything and do it now! Budgeting helps limit your expenses. It’s a good idea to have monthly budgets and a review session every quarter. During reviews, check if the budget is helping you save and is in sync with your short and long term financial plans. Riding on a good budget is essential to reach your financial goals.

#4 Is you retirement planning on autopilot?
If you answer is “yes”, congratulations! Because at least you have a retirement plan in place! In case you haven’t planned it yet, this is your red flag. Retirement planning is crucial because that’s when you will be reaping the benefits of all the years of hard work. Putting your retirement plan on autopilot is a good way of believing that you are on the right track. Well, hold on! Investments which are a part of the retirement planning need to be re visited and re-evaluated periodically. How else will you know if the funds are going to be sufficient to lead a comfortable life if not for a dream life? This is a long term plan and definitely calls for good planning and smart thinking.

#5 Investing time can double your money!
To invest smart and invest better one needs to be aware of the various options available. Hence, invest your time in educating yourself. Speak to experts, subscribe to good financial magazines, follow blogs and sign up for updates on finance websites. Knowledge about financial products can help you choose a better product while being aware of the risk involved. That way you will also feel more confident about your finances. As we know, knowledge is power. Investing time in gaining knowledge will definitely fetch rich dividends.

#6 Open new doors!
It’s easy to get into a rut while facing the daily grind. But do not let this block your thought process for coming up with new and creative ways to make more money! Think about what you are passionate about and find ways to monetize it. Work on your hobbies and take up classes to learn something new. In today’s world, where the work environment is so dynamic it important to have a plan B ready. And you never know, you may be one of the lucky few whose business is to do what they love and do it to the best of their ability. So have an open mind and develop new revenue streams.

#7. That important number!
Obviously we are referring to the CIBIL score!Regularly checking this score should top your list. However, this activity easily gets ignored unless we need to submit the score for evaluation. At that time it’s too late to take any corrective action if the score is not up to the mark. Checking your CIBIL score regularly gives you a fair idea about how institutions are going to perceive your financial health. In case, you have to apply for a loan in the near future, problems which may arise due to the CIBIL score can be resolved in advance. An action plan to improve the score can be drawn up and implemented if we track the score regularly.

Make regular financial clean ups your obsession and we promise you a heavier wallet and lighter mind. Delay no further and start today itself. After all financial management is all about smart planning and organizing. The points mentioned above will definitely help you in that. Good luck!

By Bindisha Sarang | 3 Nov, 2014, 08.00AM IST | Economic Times
More than 5000 people will lose their jobs when Nokia shuts down its manufacturing unit in Chennai, this month.

While job security cannot be guaranteed today, a skilled or experienced worker can find another one before long. However, the interim period can be difficult if one does not plan one’s finances well.

“Having an emergency fund that can take care of at least three to six months’ expenses can be of enormous help,” says Suresh Sadagopan, a Mumbai-based certified financial planner. If you have an emergency fund, you won’t have to worry about money matters and can focus on hunting for a new job. However, if you don’t, what should you do? The following steps can help you manage your household till you find a new job.

Plan a new budget

Drafting a new budget is the first step and it entails cutting down the lifestyle expenses. A monthly budget has two components: fixed expenses such as rent, and variable expenses. The former include compulsory expenses, such as groceries, electricity bills, mobile bills and other utilities that you cannot avoid, whereas the lifestyle expenses would be weekend movies at multiplexes or restaurant dinners. “The first expenses to let go off during the unemployment period are these discretionary expenses,” says Kiran Telang, a financial planner.

Take independent health insurance

It is likely that your employer offered you and your family a medical cover. However, when you lose your job, you let go of the health insurance as well. This is the reason that most financial planners insist on employees buying an independent cover besides the group cover from the employer.

Medical emergencies can happen any time and paying medical bills while out of job can be excruciating. “Getting health insurance is of paramount importance. The cover should be at least `5 lakh,” says Sadagopan. Financial advisers suggest that you buy a separate family floater policy. The average premium for a family of four is usually around `12,000 per annum. You can port your group health insurance policy to individual health insurance by the same insurer. Check with your former employer’s insurer if this is possible.

“If your life or medical insurance premiums are due during the unemployment period, you must service them, even if it’s difficult to do so,” adds Telang.

Prioritise debt repayment

Most households have debts, such as a home loan, personal loan, and credit card bills. Make sure that you pay your EMIs, especially for the home loan. If you are finding it difficult to pay the instalment, request your lender to restructure the debt.

You can also ask for deferment of loan payment. If you have been a good borrower, chances are that the lender will oblige. Switching the loan to another lender who offers lower interest rate on the loan is also an option you can explore.

Credit card debt can prove very expensive if ignored, so pay at least the minimum amount due. You can also apply for a balance transfer to another bank’s credit card, which will reduce the minimum due amount. “If you have skill sets that can enable you to get a job within 3-4 months, you don’t need to aggressively look into restructuring debts. But if you are working in a lull sector and the overall job market is not looking good, it makes sense to restructure debts as soon as possible,” says Telang.

Tap into your portfolio

Even as you look for a job, you will need to tap into your investments. “Check your portfolio and take funds keeping your asset allocation in mind,” says Sadagopan. For instance, if you have a higher asset allocation in equities, you could sell a portion to meet your immediate needs and, in the process, balance your portfolio.

WAYS TO TACKLE LOAN INSTALLMENTS

Reschedule

The lender will increase the tenure of your loan, reducing the EMI.

Restructure

You will have to convince your lender to give you a better deal in terms of interest rates.

Deferment

Inform your lender that you won’t be able to pay the EMIs for some time, but assure repayment after the said period.